Happy

Chase is sending out 1099 on the referral bonus - so the benefit would be cut by a big chunk, depending on individual tax brackets.

100K is valued as $1000, and will be reported on the 1099 accordingly. So the deduction is now $95 AF + whatever tax liability you would incur, making the value of referral quite marginal.

https://www.doctorofcredit.com/chase...%a2-per-point/

https://www.reddit.com/r/churning/co...orting_thread/

pallhedge

100k is valued for tax purposes as $1000, but in reality, they're worth much more than that, at least to me. Despite the 1099s, I still wouldn't call the value of refarrals "marginal".

Happy

Chase is putting 1c to ANY pts from Chase cards - no differentials among UR pts and Marriott pts for that matter.

However you value the UR pts, it does change the fact that you will pay taxes on the referral bonus - how much you pay depending on your tax bracket. Simple math to calculate whether paying $95 for the sole purpose of earning referral bonus. I dont see how someone with 30% or above tax bracket would be bothered with this referral thing in the future.

There is an image of a Chase 1099MISC - from a blogger of a Chiense site

The taxable value added up to $4200, from CIPs and Hyatt and Marriott. For Marriott pts to be valued at 0.01 per pt is outrageous.

Here is the link of the write up - the picture speaks itself.

https://www.uscreditcardguide.com/eh...sc-shuibiaole/

pallhedge

We're in the Chase Ink thread. So the Ink Preferred is the only card I was referring... to. The other cards, particularly Marriott, are a discussion for a different thread.

Let me repeat my original comment with more detail for clarity: For Chase Ink Preferred, one single referral of 20k UR, even at a 1cpp valuation AND after taxes, more than covers the card's annual fee (which I also write off as a business expense). This is reason enough for me to keep this particular card.

philemer

Totally agree. And it's an even better deal for those in lower tax brackets.
10% of $200 or 15% of $200 (plus possible state tax)is a small amount of tax to pay for 20K UR. ^

Happy

plus reporting a 500 pts as $500... the 1-800 number on the 1099 form leads one to India call center.... May be the 1099s are prepared by outsourcing to India to write software for identify any non sign up bonuses without any real knowledge of tax laws here... LOL.

On the non English sites there are reports of reporting $10 received from signing up Quick Pay!

I hope this thread would not get moved to some obscure forum because the old thread(s) are not only old, but seem irrelevant of what is going on NOW.

https://www.doctorofcredit.com/chase...points-as-500/

Something is running amok on how Chase' way to prepare 1099s.

The DPs in the comments of this Reddit thread are shocking... Several reports on Southwest cards retention offers are being reported on 1099s, and a poster said he received a 1099 shows $450 from Marriott card but the rub is, he never earns a Marriott card referral. He did, earn 7500 x 2 SPG referrals but from the AMEX card - so it should be $150 reported by AMEX - yet he got a $450 reported from Chase. Something is really going wrong in this 1099 preparation and Chase may not even realize it due to the phone number is to India!

https://www.reddit.com/r/churning/co...read/?sort=new

thunderlounge

1099-C issued when redeeming Chase points?

84fiero

Thanks for posting. And I'd also agree with the suggestion that it would be best to keep a dedicated Chase 1099 thread for the current issues with Chase 1099s - which are different from Amex 1099 issues, particularly with these latest wrinkles cited above.

Critterlynn

Just received a 1099-MISC for Southwest referrals. 7 referrals earned 70,000 points. 1099 was for $700. Also received retention offers totalling $85 but that wasn't reflected on the 1099 received.

I will be waiting to file my taxes. Last time this happened I received a corrected 1099 after I filed. If I remember correctly it was around mid to late March.

Caribgrl

What's next 1099's on signup bonuses...?

mia

Any organization may issue inaccurate forms if the staff who generate them were given incorrect instructions -or- if the data was not recorded in a way that allows them to reliably differentiate one type of bonus from another. A mistake does not necessarily indicate a policy change.

Often1

And taxpayers who disagree with the assessment that it is income are free not to report as income, but must account for the 1099-XX and explain their view that it is not income or that the valuation is too high.

Clearly there is a pattern among card issuers and greater vigilance out there.

thunderlounge

As those have a spend requirement attached (even if it is to just make a purchase) they are considered a rebate and not taxable.

If referral bonuses had similar language then it would also not be taxable. So if you were required to also have made a purchase on your card in the same month you had a referral, that “should” be enough to stop this.

It would also save card issuers the money to trsck/process/mail all of these.

mia

Money or points awarded for a referral is compensation for work performed. Adding another requirement would not eliminate the compensation aspect, and the payment would still be taxable.

rrgg

New referrals for Citi Premier might be a good example. After you refer someone you don't get points. You must then spend $500 to get the 10,000 points.

To me that puts the 10,000 bonus points in the same category as the regular 500 points, meaning the IRS would treat both as rebates on your $500 and not taxable.

If you think the work-performed argument overrides all of this, why do you think Citi has this requirement?